Hard-hitting economic analysis demonstrates
why the aviation industry must be a priority in the Government’s
economic strategy in order to properly equip global Britain in a
post-Brexit business environment, says think tank
the Independent Transport
Commission (ITC).
ITC statistics demonstrate the huge economic
value of supporting the aviation industry with it delivering
higher productivity, higher-paying jobs across the country,
increased foreign investment, and boosting trade: all critical
issues if the UK economy is going to be successful in a
post-Brexit environment. The key benefits of good air
connectivity include:
- Trade: Having a direct flight
compensates for around 10% of the negative effects of
international borders
- Global supply chains: Each day in
transit is equivalent of applying a value added tax of between
0.6 and 2.1%. Good air connectivity reduces this
- Investment: A new airline route between
two metropolitan areas (MSAs) leads to a 4.6% increase in
venture capital investment; a 2.5% increase in the likelihood
of investment; and increased success rates
- Foreign Direct Investment: A 10%
increase in the number of intercontinental flights leads to a
4% increase in business headquarters
- Collaboration: Between 1991 and 2012,
new routes by Southwest Airlines reduced fares by 20% and
increased scientific collaboration by 50%.
With the Government about to embark on trade
talks with the European Commission and with the National Policy
Statement for Aviation – a policy document for progressing
airport expansion proposals – still bogged down in
parliamentary process, Dr
Matthew Niblett, Director of the ITC, called for decisive
action from the Government:
“If we do not fast track support for the
UK's aviation sector, then the aspirations laid out in the
Industrial Strategy and the Brexit talks will remain stacked in
the congested skies above south
east England.
“The blueprint for harnessing the growth
potential of the aviation sector is simple. Reshape aviation
taxes and investment incentives, promote airport expansion and
strike new international air service
agreements with key trading partners and new growth
areas.”
The ITC-commissioned report –
"The Strategic Challenges Facing UK
Aviation: Assessing the future of UK air
connectivity" – was authored by former Bank of England
economist, Dr Rebecca
Driver of Analytically Driven
Ltd, and builds upon the ITC’s expertise by looking at the
economic impact, environmental issues and connectivity
associated with airport capacity growth in the south east of
England.
The report shows that improvements in air
connectivity – the introduction of direct flights, higher
frequency of flights, and increased competition – bring major
economic benefits as well as improving the structure of
economies and the benefits that flow from this.
The analysis builds upon previous ITC
aviation reports, including: "Flying into the Future" (May 2013), "The optimal
size of a UK hub airport" (February 2014), "Surface
Connectivity: assessing the merits of the Airports" (October
2014), "Delivering improved airport capacity: The cost and
impact of the Airports Commission’s short-listed options"
(March 2015) and "Time to act: the economic consequences
of failing to expand airport capacity" (June 2015). The ITC’s
aviation work is overseen by a steering group, chaired by ITC
Commissioner Dr Stephen Hickey and including
Prof OBE.
